tv Washington Journal Eileen Norcross Discusses States Fiscal Condition CSPAN July 11, 2017 1:39pm-2:00pm EDT
to the extent there are members in this body who need to focus on that, those questions need to be leff have ied towards them so we -- levied towards them and we stay focused so we hopefully have additional legislative days between now and the end of august. thank you. >> i just want to reiterate one thing you heard from everybody up here. this is a positive, constructive effort to get results for the people back home. thank you very much. [captioning made possible by constellation energy group] [captions copyright national cable satellite corp. 2017] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] >> just a couple of late breaking notes. senator mcconnell, the majority leader, quote the senate will delay the start of the august recess until the third week of august. that is reiterated by a reporter
for "politico" that mcconnell will keep the senate in session the first two weeks of august. we will keep you posted on those schedule changes. meanwhile the house is gaveling back in. back from the july 4 recess here in 20 minutes. they will come in for member speeches back for legislative work at 4:00. several bills dealing with the transfer of federal land from state and local governments and legislation with name a post office in bakersfield, california after the singer merle haggard. later in the week the house takes up the 2018 defense programs and policy bill. follow live house coverage when they return here on c-span. by satellite provider. >> "washington journal" continues. host: a discussion on the economic condition of your state with eileen norcross of george mason university mercatus serving as project director, thanks for coming on.
me o. thanks for having host: what is your interest in fiscal e state's condition? guest: before they run into trouble, do they have enough recession, and how are liabilities growing, that way you don't end up in a situation we've seen in some states. host: 50 stated, you rated viterion. various let's start talking about what ou listed when it comes to fiscal condition. cash solvency, budget solvency, long-run solvency, service-level solvency and trust-run solvency. can you discuss that criteria? guest: sure. how much ncy measures cash does a state have on hand. short-term liabilities, do states have enough revenue on cover expenses in that year, we move to long-run solvency, liability relative to assets including general
obligation debt, pension service level solvency looks at how taxes, evenue and expenses are balanced. are taxes going to meet expenses. look atwe take a deeper what is called trust-fund olvency, looking for unfunded pension liability and health are liability to public health workers. host: some states are stronger nature.e, some weakener what are tell-tale signs state is on the right or wrong track that phrase? guest: wrong track is pretty easy to identify. f you are running structural deficit for a number of years, you probably have a problem. f you have really weak cash solvency, less than one, your cash is too little to cover hort-term bills, you are looking at not being ready for recession, the states in the deficituilding up large and large pension liabilities over period of decades, those flags, if it is sustained over period of years, not a
one-time thing. side, states with strong cash reserves, they can cover states with revenues that exceed expenses, running year to year, you have low pension liabilities, and they're not states that lot of debt to cover expenses. host: if you want to find out ore about the state's economic condition and ask our guest about it, eileen norcross from mercatus center, special lines and central tern time zone, 202-748-8000. pacific time nd zones, 202-748-8001. if you want to highlight your give us a itter, tweet at c-span wj. ileen norcross, just maybe use state as an x. one thing we heard in the last couple weeks was fiscal illinois.of give us a sense of what that state did wrong and how it plays the larger issue of things you look at when judging a state's fiscal condition? guest: sustained poor performance, they built up
ension liabilities and debt over a period of decades. hey issued debt to cover unfunded pension liability when is they were not making full habit of they had underfunding pension, pushing the bill forward, issuing debt to cover it and then not servicing their short-term needs, either. cash sxogz not enough revenue year to year to cover habit of underfunding pension, pushing the bill forward, issuing debt toexpenses, they have bills.g in the i guild back to usage of debt. when issuing debt to cover debt, is a bad sign. host: the governor came in, one thing he incorporated was cuts to build the business side of it. talk about fiscal condition, how the plan play out? guest: what they decided upon increase,agreed to tax they think it will bring in about $5 billion in revenue, i then they will issue debt to cover bills, i call them fixes, they haven't dealt with structural drivers,
$133 billion, i, calculate $300 billion. they haven't dealt with drivers there and they are sweeping funds, going cash d looking for underneath your couch or something. these are short-term fixes. you said taxing, something the governor didn't want, he was vetoed. corre guest: correct, that was a point he was fighting for. host: we'll talk with our guest, are on the screen. let's start with california, how would you gauge california? is doing a ornia little better. this is fiscal 2015, they have a good sign f. there is recession, they will probably struggle. was a little y better, revenues were stronger in 2015, they have massive unfunded pension liability, they have a strong economy. elative to their economy, i think if they cut away at that problem, they made strengthen
their position a little bit. host: first caller from thomas, laguna hills. thomas, go ahead. laguna hills, california. hello. caller: good morning. how are you? yeah, hi. can you hear me? host: yes. caller: yeah. i want to know if you can give a rundown on the financial urden los angeles and california has because -- host: okay. it.ot city taking a look rather than statewide issue. sde not look d specifically at los angeles. los angeles has some serious you l problems, though, as know. they have a large pension problem, which i don't think with adequately. a lot of cities in california suffer from the problem. state pensionrnia problem or it is a local pension
underfunded ands large relative to the tax base, pay.tive to ability to i think, i would leave it there, los angeles needs to take a reform.ook at pension ost: larger issue of pension, states offer generous pension and can't meet obligation or struggling with that? uest: in the case of california, it is a little mix, we've seen -- i'd like to back general, it is not because benefits aren't been us, the systems have systematically underfunded due to accounting mistakes. the true size of the benefit and not put nothing enough. even if you make the full are undervaluing what you need to pay. that is across the board in the we have california, seen places with people maxing collecting and generous pensions, you might in general an accounting mistake and lack of states ne in some
skipping out on annual payment. host: from rogers, minnesota, for eileenry calling norcross of the mercatus center. terry, good morning, you are on her, go ahead. caller: i notice you put the top five states on, but you didn't the bottom five. on the graph, it looked like the brown the bottom five, they appear to be all democratic-run states. wondering if that relates more commonly democratic states will keep wanting to give things away for free? can't afford to pay for it. there is money for pension ecause they are spending on illegal immigrants, health care, ive-away systems that aren't being funded, they have to rob from one peter to pay paul. i wonder what your thoughts are if that follows as true? thank you. tryt: i would say, we don't to link political party to fiscal performance in this
tudy, a lot of states have long-term institutional and political factors that drive and i think mance if you go back to the really oorly ranked states of illinois, connecticut and new jersey, you have states that have built into the framework of constitution, we're going to take on more debt, it is in some itical culture cases of spending. but i would caution, i don't try to ink political party fiscal performance. i think you have to look long-running choices over period year, legislature and governors and it falls within parties. host: the center provides a map. states like maryland, kentucky, new jersey, top florida, dakotas,ut sxut wyoming. florida is a case study, a lot people, retirees, what are they doing right? guest: several things. they managed to lower spending per capita since the year 2000.
aboutave been disciplined spending. this is a state that is conservative in how it saves money. has good, strong fiscal reserve. manages debt well. of debt to e a lot take on current spending, pension liabilities are anageable relative to other states, some scholars have suggested they have term limits factor in fiscal health, this is a well managed state. wisconsin, martin, h hi. guest: good morning. thank you for c-span. i have to take a slight eileen ment with norcross in that i do think politics has something to do when we look at the largest urban areas in the have been how they managed, that has a big part in what we're talking about on this topic with pensions and other items. isconsin, we elected scott walker and he went to bat for
the private sector versus the sector and we've started to balance out some of the pension ideas that you're about like with illinois, our neighbor to the south, which is in horrible shape. think a large part ties to politics. thank you. agree with i would you, clarify from my previous political 't tie to party per se, there is nuance in or s of which legislator governor. when institutional matters atter, political factors, what choices legislators and governors are making to build rules of the game under which make budget choices, they make choices on how to structure pensions. these are political choices, ultimately about trade-offs and value judgments. think you are correct, there is a political story to tell, our city doesn't try to link one for one with this governor or this legislator.
to be an it mean average state in your thinking? guest: that brings me to a point caution, relatively texas is 23 in the ranking, still pretty robust. relative to how everyone else is doing. only place i would caution them pension liability. all states take a closer look and make sure they have the numbers. otherwise, texas is pretty robust and they seem to have a revenue collection and not big on issuing debt. ennis, his is karen from texas. hi, karen. caller: hi there. asking ing forward to this. my nephew, i live in texas and just received information that the pension program is back department in ce dallas, which makes us happy. build re we're hoping to on more officers, no one is told how it works. in in the same sense, regards to the state, i wanted to ask about investment programs
state and for states. we'd like to see the state get own or d not hold its get by with where it was, since my nephew is the treasurer for state of arizona, jeff i'm concerned, not of the same party, but my concern politics is involved, programs, e of set could we break away and in this investments, how work for a ment state to get ahead to get through the infrastructure problem? ahead. guest: i would say, when you say investment, i think about economic growth, you are getting at economic growth in the state. gets back to the idea of the rules of the game. state of texas have the you want ax climate, to counter texas and compare to
connecticut and new jersey, you have environment causing businesses to flee, causing people to flee, various there. i think you're getting at the notion of making a strong texas c environment for to thrive. host: let's hear from salem, for eileen norcross. hello. caller: yeah, hi, eileen norcross. i come from oregon and like er's is one area that is settled out really well. our people here that work for he state have a great retirement system. issuely thing i see as an in oregon, which is a nice hing, is that we don't have sales tax and i know people in oregon just love that. you know, can you answer some of the questions on how you would oregon of, you know,
feasible?ically i'll take my answer off. guest: thank you. oregon does pretty well in fiscal rankings. look at pension system more closely. i think if we are interested in having a robust well-funded plan states, the first step there is to make sure the iability is properly measured, there are no accounting gimmicks going on to obscure the bill, investment is not taking on too much risk. at uld take a deeper look the pension to ensure this is solvent going out 30 years. tax, some states don't have income tax, sometimes favor that point or low income or no income states are doing more robustly. sales income are stable forces of revenue for states. like oil s rely on revenue, not so stable. on a way you go depends lot of factors, make sure it is
broad and low. mention a pension plan several times, as far as states are concerned what are for accounting for that and how much do they have to reveal, not only to statewide residents but other people interested, as well. 2015, this was the first year states were required to put pension liability on the alance sheet, previously it wasn't there. this year the liabilities have increased a great deal on the books, separate issue related, that is how they measure it, it ets into how they value it, tying value of the liability, like a bond to the value of high risk portfolio and economists have been critical of that, saying you're depressing the do e of liability when you that, value it like a bond. there are issue necessary terms magnitude, it is a real plus they are putting it on the financial statement. twitter says, on if you could speak about recent reversal in kansas? yes, kansas is an interesting study.
as you know, they passed tax reform that has not been very successful. they included a loophole in the undertook and spending increases at the same getting iousliure taxes, and increasing spending, they have weak revenue and they growing bills. i think you can contrast kansas to north carolina. undertook ina also tax reform, cut the income tax, ut the corporate tax, got disciplined about spending. they have been reducing liabilities. north carolina made huge improvement since 2013. think looking at kansas' tax reform, not successful, contract to north carolina, which did it successfully. host: this is athens, ohio, kathleen, hi there. dayton,i'm calling from soo, where i grew up and now 19, i left and came back to take aging parents.
walk around dayton, ohio, where manufacturing was alive in '60s, until 0s and national cash register and companies started leaving dayton. you walk around and you see what trump referred to in his state of the union address as tombstones of manufacturing. so now most of those tombstones wiped out, where jobs, people were making i talked to a day, retire r $17.50 gm in 1992, making an hour when she retired. that. i'm going to repeat now i'm talking to people who former gm workers who are ompeting against their daughters for jobs at walmart family, y to the trump if you nbl manufacturing, bring those jobs back from china and people in the revive the tombstones of manufacturing, buildings that dayton, ohio, and turn
them into new and well-paid other turing and my time in spent a lot of nursing homes and the -- $8 or $9 an hour and time in work the hindends off. aides is absurd. why don't we require businesses people, multi d million and multi billion profit wage?n pay higher why don't we have a different wage for walmart, other profiting in are huge >> you can find this conversation, all of today's "washington journal" at c-span.org. look under the series tab. the u.s. house about to gavel in momentarily. with more this afternoon, the senate will extend their session. extend -- they are calling off part of the august recess. the majority leader, mitch mcconnell, issuing a statement the senate will work through the first two weeks of august. the first two weeks of the august recess are rescinded and